Cooperative pricing is helped by which of the following situations?
a) Price following
b) Advance announcement of price changes
c) Price leadership
d) Most favored customer clauses
e) Uniform delivered prices
Select the letter corresponding to the best answer. For a given consumer, any
price-quality combination along the indifference curve yields the _______________.
a) Same consumer surplus
b) Same maximum willingness-to-pay
c) High consumer surplus
d) Low consumer surplus
e) Same competitive advantage
What are the two types of barriers to entry?
a) Legal and strategic
b) Price and Size
c) Structural and strategic
d) Size and Legal
e) Price and Structure
Which of the following led to the development of the financial infrastructure pre- 1910?
a) The use of “Hollerith” or punched cards to storm information
b) The systemization and circulation of credit information
c) The telephone allowing consumers to easily apply for credit
d) The passage of the Federal Fair Credit practices Act
e) None of the above
Which of the following is true with regard to the difference in exchange costs between
an item produced internally firm and an item purchased from an outside supplier
through an arm’s length market transaction as the level of asset specificity increases?
a) The cost difference is positive for both low and high levels of specificity
b) The cost difference is negative for both low and high levels of specificity
c) The cost difference is negative for low and positive for high levels of specificity
d) The cost difference is positive for low and negative for high levels of specificity
e) As asset specificity increases, the transaction costs of the market exchange decrease
Which of the following terms describes a nation’s position with regard to the elements
(e.g. human resources, infrastructure) of production that are necessary to compete in a
particular industry?
a) Factor conditions
b) Demand conditions
c) Supply conditions
d) Related supplier or support industries
e) Strategy, structure, and rivalry
Which of the following is not a potential limitation of the five-forces framework?
a) It pays little attention to factors that might affect demand
b) It focuses on a whole industry rather than on individual firms that may occupy
unique positions that insulate them from some competitive forces
c) The framework does not explicitly account for the role of government, except when
government is a supplier or buyer
d) The framework provides a structured way to systematically work through
wide-ranging and often complex issues
e) The framework is a qualitative analysis method
Which of the following is not generally a potential benefit of diversification?
a) Control systems rewarding/penalizing division managers based on business unit
objective
b) Economies of scale and scope
c) Economizing on transaction costs
d) Diversifying shareholder portfolios
e) Identifying undervalued firms
Which of the following conditions may make predatory pricing by incumbents rational?
a) When entry costs are very high
b) When entrants are uncertain about market conditions
c) When existing firms have significant coast advantages
d) When entrants are required to obtain extensive licensing and regulatory approvals
e) When exiting firms have increasing marginal revenue
What term refers to the ability of firms to negotiate purchase prices that extract higher
profits from buyers?
a) Substitutes and Complements
b) Competition
c) Customer power
d) Seller power
e) Buyer power
Which of the following would not reduce gaming of report cards?
a) Reporting scores using simple graphics
b) Using simple composite scores
c) Making firms pay for report card results
d) Measure quality at the most aggregate level
e) Risk adjust report card scores
What caused railway transportation to remain the primary transportation source over
trucking until World War II?
a) The country lacked of an interstate highway system
b) Rail consolidation was more extensive
c) Rail was faster, safer and more reliable
d) Railroads could carry goods a further distance
e) Companies preferred rail transportation for their goods
What type of curve can be used to describe the set of price-quality combinations that
yields the same consumer surplus to an individual?
a) Frontier curve
b) Learning curve
c) Level curve
d) Implicit curve
e) Indifference curve
Which of the following types of fit (used to aide in coordination along all dimensions of
production) explains a situation where the steps of a particular process must occur in a
particular order?
a) Timing fit
b) Size fit
c) Color fit
d) Sequence fit
e) Price fit
What term refers to the situation in the used car market where owners are more anxious
to sell low-quality cars than high-quality cars?
a) Clunker market
b) Quality conundrum
c) Car scrapping market
d) Low-quality market
e) Lemons market
Which of the following is true about hospital industry profits from 1980 to 2000 and a
five forces analysis?
a) Virtually every factor caused profits to increase
b) Virtually every factor caused profits to decrease
c) Most factors are not applicable to the industry
d) The Value Net cannot be used to evaluate the industry
e) None of the above
Which of the following best describes average cost?
a) The per-unit-of-output cost for a product at a given quantity
b) The incremental cost of producing one more unit of output.
c) A cost invariant to the firm’s output
d) The sum of all costs associate with the production of a product
e) The cost of fixed items such as general and administrative expenses
What type of entry exists if structural entry barriers are low, and either (1)
entry-deterring strategies will be ineffective or (2) the cost to the incumbent of trying to
deter entry exceeds the benefits it could gain from keeping the entrant out?
a) Deterred Entry
b) Judo Entry
c) Stealth Entry
d) Accommodated Entry
e) Blockaded Entry
For what critical aspect of drug development has research (Azoulay & Henderson)
shown that major drug houses have chosen tapered integration?
a) Clinical Research
b) Drug Development
c) Marketing
d) Sales
e) Manufacturing
Why do consumers often rely on friend’s advice when shopping for experience goods?
a) They know their friend’s tastes
b) Friends are less likely to be biased reporters
c) There are no search costs in seeking friend’s advice
d) Friends are always more accurate than unknown verifiers
e) All friends share the common goal of highest quality
What term does Ronald Burt use to describe relationships in social networks in which
one actor is the critical link between individuals or entire groups of actors?
a) Mavens
b) Nodes
c) Structural holes
d) Tertius gaudens
e) Brokers
Which of the following is measured by a report card that assesses the components of a
product?
a) Process
b) Inputs
c) Warrantees
d) Outcomes
e) Longevity
Which of the following generally accompanies firms that survive as market entrants?
a) Precipitous growth
b) Lower marginal costs than incumbents
c) Higher average revenue than incumbents
d) Small size allowing fast decision making
e) None of the above
What is one way to measure a firm’s willingness-to-pay?
a) Marginal profit per unit of production
b) Value added analysis
c) Cost-benefit analysis
d) Input-output analysis
e) Sales-per-cost analysis
Which of the following is not a feature of selective contracting (used by Managed Care
Organizations) that intensified internal rivalry?
a) Had infrequent (contract lengths of two to three years) and lumpy (one insurer may
have represented over 5% of a hospital’s business) sales
b) Treated all hospitals as identical
c) Kept price negotiations between insurers and hospitals secret, encouraging hospitals
to lower prices to win contracts
d) Contracted with hospitals that patients were most loyal to
e) Created pressure for hospitals to win each individual contract with no thought of
future consequences
Which of the following terms best describes a review system in which an employee’s
supervisor, coworkers and subordinates are all asked to provide information regarding
that employee’s performance over a period of time?
a) Traditional top down review system
b) 360-degree peer review system
c) Management-by-objective system
d) Subjective performance evaluation
e) Pay-for-performance
In which of the following situations identified by Baron and Besanko will a matrix
never be optimal regardless of any additional circumstances?
a) When spillovers are positively correlated and activities are profit complements
b) When activities are profit complements but spillovers are negatively correlated
c) If activities are profit substitutes and spillovers are positively correlated
d) If spillovers are negatively correlated and activities are profit substitutes
e) None of the above
Suppose we have two firms (Firm 1 & Firm 2) enter into a transaction where Firm 1 is
upstream of firm 2 in a vertical chain. What term best describes the organization of the
transaction where Firm 2 owns the assets of Firm 1?
a) Backward Integration
b) Forward integration
c) Nonintegration
d) Contractually unbound
e) Contractually bound
Under what circumstance would it be logical to leave contracts vague and open-ended?
a) When performance may be ambiguous or difficult to measure.
b) When one of the firms in the contract is much larger than the other firm
c) If there are many other firms that can provide the same service or product
d) When the cost of writing the contract is too high
e) If the smaller of the two contracting firms is the upstream firm
Why are suppliers in a competitive upstream market said to have “indirect power”?
a) They can sell their services to the lowest bidder
b) They are always concentrated
c) Their customers are always locked into relationships with them
d) The price they charge never depends on supply and demand in the upstream market
e) The can sell their services to the highest bidder
Which of the following is not a method a firm could use to force vertical foreclosure?
a) Downstream monopolist acquires upstream supplier and refuses to buy from other
suppliers
b) Upstream monopolist acquires downstream firm and refuses to sell to other
downstream firms
c) Competitive downstream firm acquires upstream monopolist and refuses to sell to
downstream firms
d) Upstream competitor acquires downstream competitor and refuses to buy from other
suppliers
e) Competitive upstream firm acquires downstream monopolist and refuses to buy from
other suppliers
What term describes the differentiation of a product when only some consumers prefer
it to competing products (holding price equal)?
a) Horizontal differentiation
b) Vertical differentiation
c) Idiosyncratic differentiation
d) Spatial differentiation
e) Non-price differentiation
What was a key contribution to the dominance of the family-run small business in
1840?
a) Factories
b) Infrastructure
c) Raw Materials
d) Management
e) Laws